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Services providers will be challenged by automation, reliability and scalability, new research suggests.

The first quarterly Voice of the Service Provider survey conducted by US-based 451 Research has revealed that over the next three years, 77 per cent of services providers will require "some level" of IT transformation to meet the needs of their customers and to remain competitive.

Specifically, 12 per cent of service providers will require complete transformation and 65 per cent partial transformation, with the remaining 23 per cent requiring no transformation.

When it comes to dealing with the internet of things (IoT), the research found that 21 per cent of services providers do not have a formal strategy.

“Over the next two years, 60 per cent of enterprises will run most of their IT in off-premises environments,” research vice president at 451 Research Al Sadowski said. “As such, the vendor community must adapt their product roadmaps, marketing programs and sales strategies to address the growing role service providers will play.”

Since many enterprises are moving workloads off-premises, services providers are considering hyper-scale for their next compute and storage purchases, which will lead to traditional hardware and software vendors having to compete with the public cloud providers.

In the next 12 months, 57 per cent of respondents will deploy hyper-converged platforms, up from 38 per cent deployed currently. The survey also revealed that services providers will refrain from using traditional hardware solutions in favour of simpler solutions.

Backup and disaster recovery are the most represented services even though these are not the fastest-growing IT segments, according to the research firm.

A total of 39 per cent of services providers identified reliability as the most important vendor selection criteria. According to 451 Research, this mirrors the top customer pain point revealed to services providers.

Vendors able to prove their solutions are reliable and of value to their customers are more likely to succeed.

Other findings by the research showed there is strong interest in open networking projects, but limited adoption. Also, Intel and AMD are no longer expected to be the only games in town for servers over the next 12 months as ARM's cost and flexibility showed promising.

For this research, 451 Research spoke to pre-qualified business leaders at infrastructure-based service providers in China, India, the US and the UK.

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